Partnership Law

A partnership can be formed simply by two people setting up in business together with the intention to make a profit. As the definition may suggest, a partnership can be extremely flexible, although it is wise to incorporate the main terms of the arrangement between the partners in a form of Partnership Deed. Similarly on termination of a partnership it is highly desirable to have a formal Deed of Dissolution addressing issues such as the return to the partners of capital, the date of dissolution and the obligation to have dissolution accounts showing how the partnership assets and liabilities are to be dealt with.

In the normal course of things the partners in a partnership will have unlimited personal liability. It is however now possible to incorporate a limited liability partnership, which is a “halfway house” between a limited liability company and a true partnership. As far as a limited liability partnership (an LLP) is concerned, the partners’ liability is, broadly speaking, limited to the capital which they introduce or any other level of liability for which it is agreed they should individually be liable. Again it is highly desirable to put in place an LLP Agreement to reflect the terms which have been agreed between the partners. LLPs are subject to the various filing requirements very similar those of a limited company (for example the obligation to file an Annual Return each year and to file Accounts). Documents which are filed are then open to public view. Generally speaking, LLP Accounts are abbreviated and do not show specifically the capital introduced by any particular partner. Similarly, abbreviated accounts do not show the amount of remuneration paid to individual partners and so any issues of confidentiality in respect of filing documents at Companies House which may seem to be live are not in fact a problem.

SL & Co has extensive experience in relation to partnership matters (including LLPs) and in dealing with partnership disputes.